Menu

You are here:
Home / News / Key Messages from the ERP Post-Plenary Debate on Industrial Strategy

Key Messages from the ERP Post-Plenary Debate on Industrial Strategy

By Helen Thomas

On 12 January 2017, in anticipation of the Government’s Industrial Strategy Consultation, ERP[1] hosted an evening event to discuss the topic: “How can the UK energy sector help deliver the government’s industrial strategy to create new growth in home and international markets?”

This theme focused predominantly on offshore wind. The UK has the largest offshore wind market in the world, with 5.1GW currently operational. A further 1.2-2GW is expected in the next CfD auction, plus an additional 10+GW by 2020, with an estimated value of £20billion.

Given the size and historical strength of the UK offshore wind market, we have a key opportunity to build on our current position and retain world leadership. There is already significant interest from China, the USA and others, but clarity and support from a UK Industrial Strategy could help to focus this and further develop expertise. A number of opportunities for the UK were identified:

Encouraging UK banks to lead in offshore wind transactions: No UK banks currently do this; the field is dominated by continental Europe and Japan.

Exploiting export opportunities: Offshore wind is on the rise significantly in countries such as China, Japan and Taiwan, with developments also occurring on the US Eastern Seaboard. There are major export opportunities here for the UK if leadership is retained, particularly given the number of under-used UK shipping ports, for example.

Building the supply chain in offshore wind: This needs to be continued, uncovering export and local benefits, such as with the recent opening of the Siemens factory in Hull.

Championing UK expertise in the sector:

As well as focusing on major OEMs, it is important to champion SMEs (Small & Medium Enterprises) also, we need to identify areas, such as cabling companies, where the UK holds major expertise.

Developing floating wind turbines: This novel technology is generating a lot of interest. Greater UK developments here would open up even wider markets for offshore wind, e.g. in Western USA, Japan & Hawaii.

Low carbon R&D. The Research Councils currently offer very little funding for offshore wind. Could there be opportunities for low-carbon energy within the Industrial Strategy Innovation Fund which offers £2bn/year overall?

This theme focused on the need for riskier research, particularly in CCS and Small Modular Reactors (Nuclear SMRs) which differ in terms of risk, as they haven’t yet been deployed. Again, a number of opportunities were discussed:

Government needs to act to reduce risks for banks and investors: The Green Investment Bank was not set up to make risky investments. Therefore the UK Government should be more actively seeking partnerships in early high-risk projects.

Exploiting export opportunities: There is good potential for UK export opportunities in relation to SMRs. The UK has the most skilled nuclear decommissioning workforce in the world, offering export opportunities to countries like Japan.

Becoming a world leader: The UK is not the only country aiming to be world leader – many others have government-led programmes in nuclear. This should however increase the importance of competition and gaining a UK-lead.

More funding competitions: A UK funding competition for nuclear SMR research worth £250million was well received, and there is potential for more of these.

Becoming a world leader in CCS: The UK has experimented with CCS but so far business models for these (and other projects globally) have struggled. Yet this should be seen as a key opportunity for the UK to lead. CCS may feature in the upcoming Industrial Strategy document but something is needed to develop new business models for it and for other low carbon technologies. This point (regarding CCS) fits with a message from ERP’s 2015 CO2-EOR report which recommended establishing a CO2 transport network / infrastructure company. This would reduce the risks for developers of carbon capture projects.

Broader interest in Energy storage: It will be important to consider a range of energy storage options that apply at all scales across the whole energy system.

Similarities across technologies/sectors (such as nuclear and offshore wind) were additionally noted, in terms of industrialisation opportunities and transferable ‘high-end’ skills. However, comparing these technologies on a like-for-like basis can create complexities as this depends on how performance and costs etc are defined[2].

What is a UK Industrial Strategy?

The final theme asked what is an Industrial Strategy and what should it look to include?

“A document is not an Industrial Strategy and an Industrial Strategy is not a document – an Industrial Strategy is a process; and the associated document is just the start of that process”

“An Industrial Strategy can help rebalance and diversify the UK economy and allow the UK to export to global markets. There is huge scope and scale for this and much progress has been made, but there is still more to do”.